COMAIR ACHIEVES 21% INCREASE IN EPS, DESPITE TOUGH ECONOMIC CLIMATE
New Generation Boeing B737-800 fleet to enhance lowest cost structure in the industry
Johannesburg, 14 September 2010: Comair Limited, operator of British Airways in South Africa and kulula.com, today announced an increase in earnings per share of 21% for the year ended 30 June 2010, despite a year of tough trading in the current economic climate. With these results, the airline has extended its world record of consecutive profitable years to 65.
Erik Venter, Joint CEO of Comair said that the results are a decent performance and a tribute to the Comair team's great effort in difficult trading conditions. "While the increase in earnings per share is encouraging, we believe our operating margin remains too low, at under 5%. A margin of 10% is feasible and necessary if we are to achieve our growth objectives," he said.
Turnover remained similar to last year with higher volumes on both brands offset by lower airfares. Major cost variables, such as fuel and the rand-dollar exchange rate were stable during the year. Cash generation remained strong at R247-million, with the cash balance increasing to R374-million at year end. While the World Cup contributed positively in line with the company's own expectations, it did not deliver the significant boom anticipated by many external speculators, as the local market refrained from normal business and leisure travel during this time.
Both the British Airways and kulula.com brands performed well during the year, and were recognised particularly by business travellers, achieving first and second place respectively in the airline category in the Sunday Times annual Top Brands survey. "The continued success of both brands is a tribute to the 1 941 great people at Comair who continue to deliver exceptional service to our customers. We will continue to build on the talents and skills of our people going forward," said Venter.
kulula also expanded its capacity significantly during the year, mostly out of Lanseria airport, which has extended the airline's lead in the low cost segment. kulula plans to continue growing its low cost Lanseria base to achieve critical mass and greater efficiencies once the planned new high-capacity runway is in place.
Comair's African expansion also progressed well during the year, and new services to Dar es Salaam and Maputo will begin in the next few months.
Venter said that the New Generation Boeing B737-800 aircraft, of which Comair will have three operating on long-term lease by December 2010, will provide the platform for a high efficiency business model, giving Comair the lowest cost structure in the industry - similar to what has been achieved by Ryanair in the European market.
"The New Generation Boeings offer an advance in technology that provides greater reliability, 20% less fuel usage per seat, and a higher potential number of flying hours per day. We have placed an order with Boeing for a further eight new Boeing 737-800 aircraft and will be working hard to enhance our processes to take advantage of the opportunities offered by the fleet upgrade over the next few years.
"Importantly, due mainly to our 65-year profit history, we have been able to secure the credit backing of the United States Export Credit Agency for the funding of our new fleet," he said.
Venter however remains concerned about the threat of significant increases in airfares as a result of the proposed more than doubling of airport charges by ACSA (The Airports Company of South Africa ). "The impact that this is going to have on the affordability of air travel in the domestic market is a concern, and we will continue to engage strongly with the relevant stakeholders to ensure that the interests of consumers are upheld."
Looking ahead, Venter said he did not anticipate much growth in the market, as the industry was very sensitive to business activity levels which had not yet recovered from the 2009 recession. "We do however anticipate continuing to grow our market share, based on our strong brands and competitive pricing. And with our new fleet and focus on further efficiencies, we are well positioned for much stronger profit performance in future."
Statement issued by Annemie Krause of Atmosphere Communications on behalf of Comair Ltd, September 14 2010
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